Each business day, TheStreet.com Ratings compiles a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- based on data from the close of the previous trading session. Today, fast-growth stocks are in the spotlight.
These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top all stocks rated by our proprietary quantitative model, which looks at over 60 factors.
In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings-per-share growth may be affected by accounting charges, share repurchases and other one-time items.
Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large underfunded pension plans.
and its subsidiaries develop, manufacture and market products dedicated to food and animal safety. Our buy rating for Neogen has not changed since February 2003 and is based on strengths such as the company's robust revenue growth, impressive record of earnings per share growth and expanding margins.
For the first quarter of fiscal 2009, the company reported that its revenues, net income, and EPS all represented quarterly records. Revenue growth was reported at 25.7% year over year, with revenues appearing to help boost EPS, which improved 17.2%. Net income also increased, rising 24% from $3.01 million in the first quarter of fiscal 2008 to $3.73 million in the most recent quarter. Neogen attributed its record results to the assimilation of recent acquisitions and significant growth in the company's primary product lines. Additionally, the company's gross profit margin is rather high at 54.7%, but Neogen has managed to decrease this number over the last year.
Neogen's sale price has not changed very much compared to where it was trading a year ago due to the relatively weak overall performance of the market and the company's recent mixed results. However, it is currently trading at a price that is somewhat expensive compared to the rest of its industry. Due to the strengths detailed here and a lack of significant weaknesses, we feel that higher price level is justified at this time.
( RAH) is a Missouri-based company that manufactures, distributes and markets store-brand (private label) food products in the grocery, mass merchandise, drug and foodservice channels. Ralcorp has been rated a buy since February 2004, based on the company's strong revenue growth and higher earnings, along with its improved returns and solid debt management during the third quarter of fiscal 2008.
The company reported that its net sales in 12.9% year over year in the third quarter of fiscal 2008 due to volume gains across all segments and higher pricing in response to rising input costs. As a result of the sales gain, Ralcorp's earnings quadrupled to $45.80 million from $11.60 million in the third quarter of fiscal 2007. Strong fundamentals are another positive for this company, with cash balances surging from $55.9 million to $85.3 million, net operating cash flow increasing 20.7%, and a total debt decreasing 13.4%. Return on equity and return on assets improved 1,497 and 542 basis points, respectively. In addition, Ralcorp recently completed a merger with Kraft Food's Post cereals business for $2.60 billion.
The company's gross profit margin and operating margin deteriorated 145 and 83 basis points, respectively, as a result of rising raw material costs and transportation expenses. The company also appears to have a weak liquidity position, given its quick ratio of 0.69. Bear in mind that any failure to integrate recent acquisitions could hinder Ralcorp's future performance.
and its subsidiaries lend or provide credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. EZCorp has been rated a buy since January 2004. This rating is supported by the company's robust revenue growth, largely solid financial position, notable return on equity, expanding profit margins and good cash flow from operations.
For the third quarter of fiscal 2008, the company announced revenue growth of 24.2% year over year. The company experienced its twenty-fourth consecutive quarter of year over year earnings growth, with net income increasing 60.1% and EPS improving significantly from 16 cents in the third quarter of fiscal 2007 to 25 cents in the most recent quarter. A slight improvement in return on equity from 17.63% to 18.52% can be seen as a modest strength for EZCorp, while a debt-to-equity ratio of zero is also considered a favorable sign. In addition, a quick ratio of 4.55 clearly demonstrates EZCorp's ability to cover its short-term cash needs.
Management pointed out that EZCorp was impacted both favorably and unfavorably by economic stimulus checks distributed earlier this year, seeing a lower-than-expected demand for seasonal loans but experiencing higher levels of retails sales and loan redemptions during May and June. Looking ahead, the company anticipates EPS for full-year fiscal 2008 of approximately $1.19, compared with 88 cents per share reported for full-year fiscal 2007. Although we feel that the company is currently trading at a premium based on our review of its current price compared to such things as earnings and book value, we feel that the strengths detailed above outweigh any weaknesses at this time.
, which does business as 1-800-PetMeds, markets and sells prescription and nonprescription pet medications, along with other health products for dogs, cats, and horses. We have rated PetMed Express a buy since November 2004 due to such strengths as its solid stock price performance, growth in net income and revenue and largely solid financial position.
The company announced on October 20 that its revenue rose 15.6% year over year in the second quarter of fiscal 2008. This growth helped lead to EPS growth of 38.9% when compared to the same quarter last year. The company has, in fact, demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income also improved in the second quarter, rising 28.6% from $4.53 million in the second quarter of fiscal 2007 to $5.82 million in the most recent quarter. Strong earnings growth was key to helping drive the stock price higher over the last year, although other factors naturally played a role, as well. In addition, PetMed Express has no debt to speak of and a quick ratio of 5.53, factors which indicate the successful management of debt levels and the ability to cover short-term cash needs.
Management announced that it was pleased that its efforts to reduce operating expenses as a percentage of sales helped lead the company to a highly profitable second quarter. Looking ahead, PetMed Express plans to focus on capturing additional market share, as well as improving reorders and customer service levels. Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from the future financial performance of this company.
develops, manufactures and markets specialty performance ingredients and products for the food, feed and mechanical sterilization industries. Our buy rating for Balchem has not changed since June 2003, supported by the company's solid stock price performance and growth in revenue, net income, and earnings per share.
The company reported on October 30 that its revenue increased 15.3% year over year in the third quarter of fiscal 2008. Although this was a lower level of growth than the Chemicals industry average of 24.4%, the growth appears to have trickled down to the company's bottom line, helping to boost EPS, which improved slightly from 24 cents in the third quarter of fiscal 2007 to 25 cents in the most recent quarter. Net income increased 7.5% when compared to the same quarter a year ago, rising from $4.46 million to a record $4.79 million. Earnings growth and other important factors have also helped drive up the price of Balchem's stock over the past year. In addition, net sales increased 15.3% year over year.
Management announced that its strong third quarter results were the result of the company's diversified business. Due to strategic acquisitions and cross business motivation and integration, Balchem has been able to increase its global presence, helping to counteract difficult economic conditions, particularly in the U.S. market. Rising raw materials costs have negatively impacted the company's financials recently, but the company expects to see some relief from those high costs on some key raw materials in the near future. A slight decrease in return on equity in the third quarter can be viewed as a minor weakness for Balchem, but we feel that the strengths detailed about outweigh any potential issues from the company's low profit margins at this time.
Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.